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Mannatech settles Texas lawsuit

Zac Bissonnette — Fri, 27 Feb 2009 11:45:00 EST

Mannatech (NASDAQ: MTEX), that ever-sleazy multi-level marketing company specializing in the sale of miracle pills, has settled a lawsuit with the Texas Attorney General involving the company's marketing practices.

Mannatech will pay $4 million in restitution to customers and $2 million to the state to cover its investigation expenses. Sam Caster, the company's founder, former chairman, and largest shareholders, will also pay $1 million and be barred from serving as an employee, officer, or director of the company for five years.

In 2007, Texas' attorney general filed a lawsuit accusing the company of exaggerating the benefits of its products, based on marketing materials produced by the company's independent distributors, which claimed that Mannatech vitamins could cure cancer and down syndrome.

Shares of Mannatech still trade on the NASDAQ for around $3 per share. In a press release, the company's CEO said that Mannatech has made significant changes to its operations since the investigation began, including the devotion of more resources to monitoring distributor compliance. But the fact is that Mannatech sells an overpriced product through a multi-level marketing structure that is rife with potential for consumer abuse.

Mannatech settles Texas lawsuit originally appeared on BloggingStocks on Fri, 27 Feb 2009 11:45:00 EST. Please see our terms for use of feeds.

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Mannatech receives Wells Notice from SEC

Zac Bissonnette — Mon, 08 Sep 2008 17:10:00 EST

Filed under: Law, Scandals, Stocks to Sell

Mannatech (NASDAQ: MTEX) disclosed on Friday that it had received a Wells Notice from the SEC, indicating that the commission may pursue enforcement action.

In the press release, Mannatech said that the notice is "related to the timing and completeness of Mannatech's October 2007 disclosure regarding its dismissal of Grant Thornton LLP as its independent registered public accountants."

Back in October, when Mannatech fired Grant Thornton, I questioned the timing and rationale of the decision and now it seems the SEC isn't satisfied with the company's reason for the end of the relationship. Amazingly, shares of Mannatech didn't tank today, but they should have: the integrity of the company's management, directors and disclosures has been called into question, and if you don't know if the company is telling the truth, it's hard to tell how much it's worth.

If you need another reason not to own shares of Mannatech, consider the lawsuit filed against the company by the Texas attorney general alleging illegal marketing practices.

Mannatech receives Wells Notice from SEC originally appeared on BloggingStocks on Mon, 08 Sep 2008 17:10:00 EST. Please see our terms for use of feeds.

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Outrageous executive severance perks - talk about chutzpah!

Melly Alazraki — Tue, 22 Jul 2008 13:46:00 EST

Filed under: Management, General Electric (GE), Scandals, Bank of America (BAC), Countrywide Financial (CFC), Contl Airlines'B' (CAL)

Stockholders of publicly traded companies, as well as the general public, have recently become outraged with executive compensation and their hefty bonuses, especially in light of the mounting losses at some companies. It seems that no matter what happens or what they do, executives somehow always win. They win big during their employment, and sometimes even more as they retire. With all that money, you'd think that haggling over some perks in their package would be beneath them . . . but it isn't.

The recent outrageous perk award goes to Continental Airlines (NYSE: CAL) CFO Jeffrey Misner who asked for and was granted a free lifetime parking spot at Jacksonville International Airport. As long as the 54-year-old retiree lives within 200 miles of Jacksonville Airport, and providing Continental has operations at the airport, Misner will have a free parking place. Of course, that's just a perk that goes with a $2,997,000 retirement pay.

At the beginning of the year, many were shocked to hear that Countrywide Financial Corp. -- the poster child of the subprime mortgage meltdown, which has been bought by Bank of America (NYSE: BAC) -- CEO Angelo Mozilo was going to receive a $36.4 million cash severance payments, $400,000 per year for consulting services, and perks including the use of a private airplane. He walked away from most of these after a public outcry. Don't feel bad though, he still left with at least $23.8 million.

It just doesn't cease to amaze me how some people have the nerve to ask for certain perks in addition to their very fine salaries and severance pays. Here are some more examples:

Hanmi Financial (NASDAQ: HAFC) President and CEO Dr. Sung Won Sohn requested and got a 2005 Mercedes Benz 430S, as well as the transfer of his membership to the Wilshire Country Club and the Jonathan Club. This was in addition to his $1,298,000 lump sum retirement pay.

Continue reading Outrageous executive severance perks - talk about chutzpah!

Outrageous executive severance perks - talk about chutzpah! originally appeared on BloggingStocks on Tue, 22 Jul 2008 13:46:00 EST. Please see our terms for use of feeds.

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Mannatech settles shareholder lawsuits

Zac Bissonnette — Mon, 16 Jun 2008 17:56:00 EST

Filed under: Law, Scandals

I've been following the saga of Mannatech, Inc. (NASDAQ: MTEX) for awhile, mainly because it's too good of a train wreck to pass up: a highly questionable business model, allegations of false and misleading claims about its nutritional products, and corporate governance issues that make Countrywide Financial Corporation (NYSE: CFC) look like Berkshire Hathaway (NYSE: BRK.A). It all started when Texas' attorney general sued the company alleging false and misleading marketing practices. Then chairman Sam Caster resigned from his post as CEO to devote more time to the company, and the company dismissed its auditor over its refusal to strip Caster of his chairmanship.

Oh, and the company has been dealing with shareholder class action lawsuits throughout this matter, alleging that the company used false and misleading tactics to boost its sales and share price. The company announced on Friday that it has settled the lawsuit, agreeing to make "certain corporate governance changes" and pay $850,000 in legal fees to the plaintiffs' attorneys.

So like most shareholder lawsuits, this one ended up being a big fat nothing, and it removes one of the company's many, many problems. The most pressing one still remains: a product of questionable merit distributed through a system that many critics believe is little more than a pyramid scheme. Oh, and the company is losing money, even with that business model. The press release is notable, however, for this awe-inspiring sentence which I believe actually contains the rare triple-negative: "However, such settlements are not uncommonly approved without material modification and, barring any unusual developments, the Company expects that this approval process will be completed within a four to six month period." (emphasis mine)

Mannatech settles shareholder lawsuits originally appeared on BloggingStocks on Mon, 16 Jun 2008 17:56:00 EST. Please see our terms for use of feeds.

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Robert Kiyosaki presents at Mannatech annual convention

Zac Bissonnette — Fri, 11 Apr 2008 14:14:00 EST

Filed under: Scandals, Books

If you asked me to come up with a list of ways to destroy your credibility as an entrepreneur, here are two of the best ways I would come up with: associate with Mannatech (NASDAQ: MTEX), an embattled multi-level marketer, and associate with Robert Kiyosaki, the motivational author who has been exposed as a charlatan, exaggerator, and all-around bozo.

So it was with great amusement that I stumbled upon this press release:

Mannatech, Incorporated, a leading developer and provider of dietary supplements and skin care solutions, announced today its speaker line-up and events for MannaFest 2008. Keynote speakers include Bob Burg, co-author of The Go-Giver, and Robert Kiyosaki, author of Rich Dad, Poor Dad.

I've devoted a fair amount of bandwidth to trashing both of these. I first got interested in Mannatech when the Texas Attorney General sued the company for illegal sales and marketing practices. Then the company announced that its CEO was stepping down to -- get this -- devote more time to the company. Then, just when you thought this corporate outhouse couldn't get any goofier, Mannatech fired its independent auditor when the firm insisted that the chairman step down from his post.

And as for Kiyosaki: just read this blistering expose from John T. Reed.

Of course, it's possible that my impression of either of these entities could have been wrong. But Robert Kiyosaki speaking at Mannafest is the equivalent of Gary Condit and Mark Foley teaming up for a seminar on ethics.

Robert Kiyosaki presents at Mannatech annual convention originally appeared on BloggingStocks on Fri, 11 Apr 2008 14:14:00 EST. Please see our terms for use of feeds.

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Mannatech fires its independent auditor

Zac Bissonnette — Fri, 19 Oct 2007 13:56:00 EST

Filed under: Scandals

Embattled multi-level marketing firm Mannatech (NASDAQ: MTEX) has fired its independent auditor, Grant Thornton, after the auditor gave the company an ultimatum: Remove Chairman and founder Sam Caster from the company or find yourself another auditor.

And so Mannatech put out a press release announcing that the company had engaged BDO Seidman as its new independent auditor. Why would Grant Thornton have a problem with Mr. Caster? Well in July, the Texas Attorney General sued the company for making false and misleading claims about its products. Then in August, Caster resigned from his role as CEO to, according to the press release, "focus his efforts on working with field sales leaders to transition to Mannatech's new global wellness sales program.""

Right. Basically, he resigned to devote more time to Mannatech. He's also come under fire for using his role in the company to tout his religious beliefs, and many observers feel that Mannatech has cultivated a cult-like atmosphere among its distributors.

Amazingly, the stock didn't react negatively to the dismissal of the auditor following the ultimatum. If the auditor demands that the Chairman be fired, shouldn't investors be concerned too?

Mannatech fires its independent auditor originally appeared on BloggingStocks on Fri, 19 Oct 2007 13:56:00 EST. Please see our terms for use of feeds.

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Mannatech (MTEX): Still making money because people are still stupid

Zac Bissonnette — Fri, 24 Aug 2007 15:40:00 EST

Filed under: Bad News, Management, Law, Scandals, Stocks to Sell

When the XFL failed after just one season, I breathed a sigh of relief: Apparently it really was possible to lose money by assuming that the American public is stupid.

Well Texas-based multi-level marketer Mannatech (NASDAQ: MTEX) has proven that the assumption of stupidity is alive and well as a means of making money -- or at least keeping your stock price from collapsing even more than it already has.

On Tuesday afternoon, founder Sam Caster resigned as CEO to "allow him to step back from operating responsibilities to focus his efforts on working with field sales leaders to transition to Mannatech's new global wellness sales program."

The press release didn't even mention the Texas Attorney General's investigation that has pummeled the stock of late -- a pretty brazen case of corporate spin. Even if Caster really is resigning to work with field sales leaders, isn't that indicative that the company is facing pretty serious problems? And remember, Mannatech's army of associates is its bread and butter. If that's in disarray (it is), the whole company is a train-wreck (it is).

So how did the stock respond? It was up more than 3% on Wednesday, and continued to rise on Thursday.

Who says markets are efficient?

Mannatech (MTEX): Still making money because people are still stupid originally appeared on BloggingStocks on Fri, 24 Aug 2007 15:40:00 EST. Please see our terms for use of feeds.

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Mannatech (MTEX) CEO quits to devote more time to Mannatech

Zac Bissonnette — Wed, 22 Aug 2007 14:26:00 EST

Filed under: Management, Scandals

Less than two months after the Texas Attorney General sued Mannatech (NASDAQ: MTEX) for illegal sales and marketing practices, the company's founder and CEO, Sam Caster, has resigned (subscription required), but will stay on as non-executive chairman.

Mannatech, a multi-level marketing company, has come under fire after reports that its sales force was claiming that its products could cure cancer, Down syndrome, and numerous other serious conditions.

But don't worry. The press release doesn't even mention the lawsuit that has pummeled the stock. According to the company's press release, "His changing role at Mannatech will allow him to step back from operating responsibilities to focus his efforts on working with field sales leaders to transition to Mannatech's new global wellness sales program."

Right. And Michael Vick is retiring from football indefinitely to spend more time with people who have been less fortunate. If I were Mr. Caster, I'd be looking for the next plane to Lichtenstein.

Mannatech (MTEX) CEO quits to devote more time to Mannatech originally appeared on BloggingStocks on Wed, 22 Aug 2007 14:26:00 EST. Please see our terms for use of feeds.

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Mannatech's (MTEX) pathetic press release

Zac Bissonnette — Mon, 20 Aug 2007 14:00:00 EST

Filed under: Law, Scandals

I can only think of two words to describe embattled multi-level marketing firm Mannatech's (NASDAQ: MTEX) latest press release: transparent and pathetic.

In case you haven't been following, the Texas Attorney General Greg Abbot filed a lawsuit against the company in July accusing the company of illegal sales and marketing practices, "falsely claiming its products cure, mitigate, treat or prevent diseases such as cancer, autism and Down's syndrome, in violation of state and federal laws." (source: WSJ).

Well now Mannatech has a whipping boy of sorts. With great fanfare, including a press release, the company announced it had terminated the distributorship or Raymond Gebauer, who has been convicted of tax evasion:

"Mr. Gebauer's conviction places him in violation of his Associate agreement with Mannatech," said Terry Persinger, President and COO of Mannatech. "We expect, and the Company's policies require, all Mannatech Associates to comply with applicable laws, including tax laws."

Is Mannatech just putting out this press release to brag that it does take compliance with the law very seriously? Of course. Is anyone likely to buy it? Of course not. The Attorney General's complaint contained ample evidence to show just how seriously Mannatech takes the law. Now that it's under scrutiny, it has some work to do. But for now, we'll have to settle for PR work.

Gebauer was one of the company's top distributors, with a down-line of 718,000 people. The stock is up 2% in early-morning trading.

Mannatech's (MTEX) pathetic press release originally appeared on BloggingStocks on Mon, 20 Aug 2007 14:00:00 EST. Please see our terms for use of feeds.

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Texas Attorney General sues network marketing company Mannatech

Zac Bissonnette — Fri, 06 Jul 2007 14:45:00 EST

Filed under: Law, Newspapers, Scandals

Shares of Mannatech (NASDAQ: MTEX) are down about 23%, making the shares the top decliner on the NASDAQ. The problem? According to the Wall Street Journal, "The Texas attorney general has asked a state court to bar Mannatech Inc. from allegedly illegal sales and marketing practices, saying the dietary supplement seller is falsely claiming its products cure, mitigate, treat or prevent diseases such as cancer, autism and Down's syndrome, in violation of state and federal laws."

You can read Attorney General Greg Abbott's complaint here. Mannatech has been under fire for months, after the Wall Street Journal ran an unfavorable piece on the company, exposing much of the same wrongdoing that the Texas lawsuit accuses the company of.

Like Amway and Usana Health Sciences (NASADAQ: USNA), Mannatech distributes its products through a multilevel marketing business model. Associates seek to recruit others into the fold, earning commissions on their sales, and the sales of those that they recruit.

According to Mannatech Chairman Sam Caster, "We walk the fine line of always stating our case appropriately and always training our people. We're not into the treatment, cure or mitigation of disease. We're into the improvement of quality of life ... everybody benefits from good nutrition."

Here's the problem. According to Mannatech's opportunity website (emphasis added):

Build your own home-based business and be your own boss! Whether you're looking for the potential of part-time extra income or a promising new career, Mannatech has an opportunity for you.

Enroll as an Associate to become instantly eligible for the level of commissions you wish to earn. Share what you learn with as few as six friends, and you can receive a commission on the products they purchase!

Mr. Caster can talk about "always training our people" but the fact is that no such training is required to distribute Mannatech products and recruit other distributors. Misrepresentation seems like a direct result of the nature of the business model.

Texas Attorney General sues network marketing company Mannatech originally appeared on BloggingStocks on Fri, 06 Jul 2007 14:45:00 EST. Please see our terms for use of feeds.

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